IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/10006.html
   My bibliography  Save this paper

Geography and Firm Exports: New Evidence on Sunk Costs

Author

Listed:
  • Lawless, Martina

Abstract

This paper presents an extension of the analysis of the geographic dimension of trade, by examining the trading patterns of individual firms. Aggregate data does not tell us if a sector is geographically diversified because there are many exporting firms, each of which specialises in a separate destination, or if the firms themselves are selling their exports in many markets. This analysis is made possible by access to a new survey dataset of Irish firms, which includes detailed information on firm characteristics and on the destinations of their exports over a two-year period. In line with Eaton, Kortum and Kramarz (2004), we find that a large number of firms serve only the domestic market and many exporting firms export to a single foreign market. Although there is little movement of firms into and out of exporting, firms’ involvement in individual export markets is much more dynamic. Over thirty percent of firms change their market coverage, usually by entering or exiting one additional market. This is interpreted as evidence that the bulk of any sunk cost encountered in exporting in incurred during the initial entry to the export market. Subsequent entry to additional markets is made easier by prior export experience, which reduces the sunk cost of extending market coverage.

Suggested Citation

  • Lawless, Martina, 2006. "Geography and Firm Exports: New Evidence on Sunk Costs," MPRA Paper 10006, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:10006
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/10006/1/MPRA_paper_10006.pdf
    File Function: original version
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Jonathan Eaton & Samuel Kortum & Francis Kramarz, 2004. "Dissecting Trade: Firms, Industries, and Export Destinations," American Economic Review, American Economic Association, vol. 94(2), pages 150-154, May.
    2. Frances Ruane & Julie Sutherland, 2005. "Ownership and Export Characteristics of Irish Manufacturing Performance," The Institute for International Integration Studies Discussion Paper Series iiisdp032, IIIS.
    3. Heckman, James, 2013. "Sample selection bias as a specification error," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 31(3), pages 129-137.
    4. Roberts, Mark J & Tybout, James R, 1997. "The Decision to Export in Colombia: An Empirical Model of Entry with Sunk Costs," American Economic Review, American Economic Association, vol. 87(4), pages 545-564, September.
    5. Stephen Pavelin & Frank Barry, 2005. "The Single Market and the Geographical Diversification of Leading Firms in the EU," The Economic and Social Review, Economic and Social Studies, vol. 36(1), pages 1-17.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Péter Harasztosi, 2016. "Export spillovers in Hungary," Empirical Economics, Springer, vol. 50(3), pages 801-830, May.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Martina Lawless, 2010. "Geography and firm exports: new evidence on the nature of sunk costs," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 146(4), pages 691-707, December.
    2. Martina Lawless & Karl Whelan, 2014. "Where Do Firms Export, How Much and Why?," The World Economy, Wiley Blackwell, vol. 37(8), pages 1027-1050, August.
    3. Rudy Douven & Remco Mocking & Ilaria Mosca, 2012. "The Effect of Physician Fees and Density Differences on Regional Variation in Hospital Treatments," CPB Discussion Paper 208.rdf, CPB Netherlands Bureau for Economic Policy Analysis.
    4. Arjan Lejour, 2008. "The Principle of Subsidiarity and Innovation Support Measures," CPB Memorandum 208.rdf, CPB Netherlands Bureau for Economic Policy Analysis.
    5. Roger Smeets & Harold Creusen & Arjan Lejour & Henk Kox, 2010. "Export margins and export barriers: uncovering market entry costs of exporters in the Netherlands," CPB Document 208.rdf, CPB Netherlands Bureau for Economic Policy Analysis.
    6. Qun Bao & Ninghua Ye & Ligang Song, 2016. "Congested Export Spillover in China," Review of Development Economics, Wiley Blackwell, vol. 20(1), pages 272-282, February.
    7. Jonathan Eaton, Marcela Eslava, Maurice Kugler,James Tybout, 1970. "Export Dynamics in Colombia: Firm-Level Evidence," Working Papers eg0036, Wilfrid Laurier University, Department of Economics, revised 1970.
    8. Ivan Duran & Michael Ryan, 2014. "Spillover Effects from Inward FDI on the Exporting Decisions of Chilean Manufacturing Plants," Journal of Industry, Competition and Trade, Springer, vol. 14(3), pages 393-414, September.
    9. Volpe Martincus, Christian & Carballo, Jerónimo, 2010. "Beyond the average effects: The distributional impacts of export promotion programs in developing countries," Journal of Development Economics, Elsevier, vol. 92(2), pages 201-214, July.
    10. Maria Bas & Vanessa Strauss-Kahn, 2014. "Does importing more inputs raise exports? Firm-level evidence from France," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 150(2), pages 241-275, May.
    11. Koenig, Pamina & Mayneris, Florian & Poncet, Sandra, 2010. "Local export spillovers in France," European Economic Review, Elsevier, vol. 54(4), pages 622-641, May.
    12. Sanne Hiller, 2014. "The Export Promoting Effect of Emigration: Evidence from Denmark," Review of Development Economics, Wiley Blackwell, vol. 18(4), pages 693-708, November.
    13. Kalina Manova, 2013. "Credit Constraints, Heterogeneous Firms, and International Trade," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 80(2), pages 711-744.
    14. Crinò, Rosario & Ogliari, Laura, 2015. "Financial Frictions, Product Quality, and International Trade," CEPR Discussion Papers 10555, C.E.P.R. Discussion Papers.
    15. Franco, Chiara & Sasidharan, Subash, 2010. "MNEs, technological efforts and channels of export spillover: An analysis of Indian manufacturing industries," Economic Systems, Elsevier, vol. 34(3), pages 270-288, September.
    16. Roc Armenter & Miklós Koren, 2015. "Economies Of Scale And The Size Of Exporters," Journal of the European Economic Association, European Economic Association, vol. 13(3), pages 482-511, June.
    17. Beverly Lapham & Hiroyuki Kasahara, 2005. "Import Protection as Export Destruction," 2005 Meeting Papers 528, Society for Economic Dynamics.
    18. Anwar, Sajid & Nguyen, Lan Phi, 2011. "Foreign direct investment and export spillovers: Evidence from Vietnam," International Business Review, Elsevier, vol. 20(2), pages 177-193, April.
    19. Aeberhardt, Romain & Buono, Ines & Fadinger, Harald, 2014. "Learning, incomplete contracts and export dynamics: Theory and evidence from French firms," European Economic Review, Elsevier, vol. 68(C), pages 219-249.
    20. Yue Jin & Chen Chen & Zhanyi Shi, 2021. "Spillover Effect of FDI on Food Exports: Based on Firm-Level Analysis in China," Sustainability, MDPI, vol. 13(9), pages 1-20, April.

    More about this item

    Keywords

    Firm exports; sunk costs; market concentration;
    All these keywords.

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:10006. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Joachim Winter (email available below). General contact details of provider: https://edirc.repec.org/data/vfmunde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.